The Responsible Investment Association (RIA) has developed a diversity-related investor statement for institutional investors.
The association created the Canadian Investor Statement on Diversity and Inclusion over the summer and confirmed 10 founding signatories in September that collectively represent $1.1 trillion in assets under management (AUM). The statement is now circulating among institutional investors.
Signatories must acknowledge “the existence of systemic racism and its impacts on Black and Indigenous communities and people of colour in Canada and globally” and commit to promoting diversity and inclusion (D&I) “across our portfolios and within our organizations.”
Dustyn Lanz, CEO of the RIA, said the statement is part of the investment community’s response to the “racial injustice reckoning” that has occurred this year, adding that the association was inspired by the BlackNorth CEO pledge led by Kingsdale Advisors executive chair Wes Hall. More than 320 CEOs have signed the BlackNorth pledge.
Lanz said the RIA’s statement differs from other investor codes in that it not only addresses D&I issues within invested companies, but also within the institutional investors themselves.
“The big innovation here is that most investor statements are just focused on the portfolio, whereas this is both the portfolio and the institution making commitments,” Lanz said.
Signatories pledge to report their D&I efforts publicly and to “review and update” their D&I approaches. Lanz said that in an effort to encourage wide adoption, the statement does not specify frequency or scope for reporting because signatories’ “reporting channels and capabilities vary widely.”
Signatories also agree to conveying three expectations to the Canadian companies they invest in: enhanced annual public disclosures of diversity data, specifically by race; adoption of diversity-related “policies, targets and timelines,” with “the ultimate aim of being aligned with the racial and ethnic demography of Canada;” and expansion and disclosure of D&I efforts.
The investors themselves must “endeavour to” engage with the companies they invest in on D&I issues; integrate D&I into their investment processes, for example by “tracking and monitoring the D&I performance of Canadian public companies;” and improve their own D&I practices.
Lanz said the statement uses the word “endeavour” to reflect the collaborative, long-term approach typically taken by institutional investors.
“Different responsible investors have different strategies,” he said. “We did not want the wording to imply a divestment strategy, because selling a company’s stock to the lowest bidder will not improve its diversity profile [or] improve D&I in corporate Canada. Many institutional investors collectively telling Canadian companies that they expect to see concrete efforts to advance D&I on a number of fronts is very powerful.”
Lanz hopes the statement’s reporting mechanism will hold investors accountable by providing their stakeholders “with an opportunity to ask questions or make judgments based on the material disclosed.”
Furthermore, the statement “has gone through legal and compliance teams before institutional investors are signing on; they’re making sure they can meet the commitments,” he said.
Lanz acknowledges that as a result, some investors won’t need to make changes to comply with the statement.
“There are leaders out there who are doing a lot of [what’s in the statement] already,” he said. “But if part of what we accomplish is bringing the entire industry up to a leadership position, I think that’s quite impactful.”
The founding signatories are Addenda Capital, AGF Investments, Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Desjardins Group, iA Clarington, Mackenzie Investments, NEI Investments, OPSEU Pension Trust and University of Toronto Asset Management.
Interested firms can sign the D&I statement until 12 pm on Sept. 30, and the list of signatories will be announced Oct. 1. Lanz said he hopes the statement’s signatories surpass $2 trillion in AUM by the deadline.